Life/Term assurance - placing it in trust - help my head hurts!

brokthebadger

Hi there,

Following Martins piece on the importance of term assurance I have the forms to sign up to £200k of cover with L&G through Cavendish Online - £14 a month over 17 years sounds good value to me. But I am a bit confused on the placing it in trust section. I want the payout to go to my wife in the first instance but if she cops it at the same time as me obviously I want the payout to go to our 2 children preferably without inheritance tax being due. So how do I achieve both aims? I presume that if I make my wife the current beneficiary and we both die at the same time the payout will pass to our estate, on which Inheritence Tax will be due unless we set up another wider trust that covers the whole estate. But if I just make our kids the current beneficiaries then my wife doesn't have direct control over the payout. Is the usual solution to make the kids the beneficiaries and my wife one of the three trustees? Any help unpicking this ramble is gratefully received!

Thanks

Brok

dunstonh

Write it in trust to the children. Make sure you have the owner/life assured set correctly as well.

brokthebadger

Hi Dunstonh,

Thanks for your reply. Am I right about the logic of including my wife as one of the trustees? What control over the proceeds do trustees have? I want to make sure that even if the beneficiaries are our two children that my wife can access that money without undue complication on their/her behalf. Is it just the case that as long as the trustees agree they can decide fairly straightforwardly what happens to the money? e.g it could be invested but equally it might need to be used for immediate living expenses?

dunstonh

your wife will be a trustee and the children's interests will be the same as your wife's (food, clothing, everyday housing expenditure etc). Obviously, I am only referring to the family element of the life cover. Mortgage and debt protection should just be simple joint life first death with no trust.